19 Feb How will the 6th AML Directive affect us all?
With the transitioning of the 6th AML Directive (6AMLD), EU Member States shall transpose such by not later than December 2020 and entities will have until June 2021 to align themselves with the requirements. Our professional team of Auditors at GCS Malta, outline the changes that will be introduced in the 6th AML Directive.
What will change with the introduction of the 6th AML Directive?
The 6AMLD is shall adopt a harmonised definition for all its Member States about the reasons that constitute a money laundering offense. The main aim is to exclude any existing loopholes of interpretation between the distinct Member States domestic legislation.
In addition, the 6AMLD will incorporate twenty-two latent offences, including cybercrime and environmental crimes. The implementation of such crimes indicates that the EU is becoming sensitive to the ever-complex issue of protecting our natural habitats and physical environment, while also accepting the fact that cybersecurity is matter of national importance if not national security. Cybersecurity has been given a lot of attention by local (Maltese) government and authorities with additional initiatives being launched in the coming months.
The 6AMLD will impose higher expectations on individuals and companies. Employees will need to be properly trained to identify potential money laundering indicators, especially but not limited to those outlined in Article 2 of the Directive.
The 6AMLD is looking to extend criminal liability to companies and organisations, where responsible persons within such entities (directors, decision takers and those acting for and on behalf of the company or organisation) shall be subject to criminal liability.
It ensures that legal organizations as well as individuals can be subject to punishment if one or more individual working within the organization have refused to take action to prevent this criminal activity. The 6AMLD tough stance can be seen by the fact that even if criminal activity which generated illicit proceeds / funds cannot be identified, individuals or legal persons can be convicted.
Sentences for AML offences will also increase. Minimum sentencing will be of four (4) years which is “without prejudice to the individualisation and application of penalties and the execution of sentences in accordance with the concrete circumstances in each individual case. Member States shall also provide for additional sanctions or measures, such as fines, temporary or permanent exclusion from access to public funding, including tender procedures, grants and concessions, temporary disqualifications from the practice of commercial activities or temporary bans on running for elected or public office.”
A court of law may, at its discretion, agree to impose additional punitive measures or, if all the circumstances of a particular situation are taken into a holistic account, minimize them.
In addition, the 6AMLD introduces new investigative mechanisms and guidelines for Member States to assess jurisdictional responsibility when an offence falls within the jurisdiction of more than one Member State. Factors such as the territory of the Member State on which the offence was committed, the offender’s nationality or residence, the victim or victim’s country of origin, and the territory in which the offender was found are all to be taken into account when deciding on jurisdiction.
The Directive also introduces the requirement for a money laundering offence to be treated as unlawful in the jurisdiction, where the offence takes place as well as in which the offence has been committed.
Whilst 2021 seems to be a distance reality, in actual fact it is only 10 months away. Organizations as well as individuals need to begin reviewing their existing policies, processes, practices and training to decide what changes are needed from an organizational, cultural and procedural point of view. Staff need to act in a professional way when it comes to awareness and understanding of ensuring that subjects are able to quickly identify the signs of a money laundering offence and what action needs to be taken to protect not only their image, but also that of their company.
Similarly, the directors and shareholders of the subject persons must ensure that the company and its personnel are well prepared to carry out all required checks and have sufficient understanding to show beyond reasonable doubt that all practicable steps have been taken to prevent or report an actual or potential money laundering offence.
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